Optimize Master Data Management Through Federated Data Governance

SAP Thought Leadership Paper | PUBLIC Data Management in the Cloud

Optimize Master Data Management Through Federated Data Governance An Adaptive Model for Trusted, Process-Relevant Data to Drive Greater Insights, Efficiencies, and ROI

3 The Master Data Imperative

5 The Importance of Master Data Integration

8 A New Paradigm: Federated Data Governance

11 The Case for Cloud-Centered Federation

12 Master Data Governance in the Cloud

15 Becoming an Intelligent Enterprise

17 First Steps to Federated Data Governance

2 / 17

The Master Data Imperative

Organizations have seldom faced greater chal- analysis and insights to respond quickly and lenges. Financial markets and corporate finance accurately to a rearranged business landscape. remain volatile. Customer behaviors are evolving as more people shop electronically. Employee But effective master data management (MDM) behaviors are adapting as more staff work has long been an escalating imperative. You need remotely. And operations are adjusting as supply the right data in the hands of the right people chains recoil from sudden shocks. to optimize operations, understand and serve customers, and speed innovations to market It has never been more important for your enter- (see Figure 1). And in a digital economy, you need prise and your lines of business (LoBs) to have those insights fast. access to trusted, high-quality data. They require

Figure 1: Business-Critical Initiatives Supported by MDM

nsure r ies eia teg e a tra rt s iﬁc n ss ia T io ne i r t si nt u p u e s u ig t r n e s e n i iv c r e D d a a t n a a d h t ic it s

a d n a d e

i n

i g

t Master data management

t n D a e r e i v e e c r c d a a ta a n C n o p io i o ro t t t ra m e e a p ct p m l io o r i n an o a a s f n nd a s c pr ta n e iva da ra c oc T n

3 / 17

Yet meeting these intensifying requirements hasn’t To achieve those goals, you need the right mix been easy. In many organizations, data governance of technology and organizational support. is control focused, one size fits all, and separated Your MDM platform should offer robust capabilities, from real-world use cases. Enterprise MDM out-of-the-box integration, aligned data-domain becomes an unnecessarily complex and costly models, and on-demand scalability. undertaking that’s disconnected from local decision-making in the LoBs. And as a result, Just as important, you need effective data gover- master data governance initiatives fail to deliver nance. You must have a governance model that the benefits the organization needs. reflects your organization, business processes, and data drivers. Instead, data governance programs, including MDM, should extend throughout the enterprise. That’s the power of a new MDM paradigm: They should be context relevant and supportive federated data governance. With federated data of frontline decisions and actions. They should governance, you can: be agile enough to respond to rapidly changing • Skillfully access and share master data to business dynamics. And they should drive new fuel cross-functional analytics, insights, and innovations, experiences, and business models. business processes • Manage data where it’s best understood to optimize MDM scope, benefits, and effort • Take a stepwise approach to enterprise MDM to accelerate time to value

Your MDM platform should offerrobust capabilities, out-of-the-box integration, aligned data-domain models, and on-demand scalability.

4 / 17

The Importance of Master Data Integration

Effective MDM enables integration of data Alternatively, you can use a purely centralized across your enterprise. Integration equips you, model, creating master data in a single location for example, to combine operational data from for consumption by LoB applications. But this your ERP system with experiential data on how approach doesn’t accommodate the governance customers interact with your brand. As a result, of context-relevant data attributes required by you’re able to deliver – and reap business returns your LoBs. As a result, inadequate data quality on – better customer experiences. impedes the efficiency and accuracy of LoB processes and insights. You can achieve integration – or something like integration – in a variety of ways. For example, A more effective approach is to place an integration you can treat each LoB application as having its service between your LoB applications (see own master data and simply share that data Figure 2). In this model, the integration service among applications in a point-to-point manner. centrally shares all application data. It provides But this approach is obviously complex and a lingua franca for applications to speak to one inefficient, and it won’t result in a single version another across heterogeneous multi-cloud and of the truth. hybrid environments. This common language helps link different representations of the same master data domain.

Figure 2: Point-to-Point Versus Centrally Managed Integration

Point to point Hub and spoke

Procurement Procurement

Commerce Service Commerce Service

Master data services

Marketing Billing Marketing Billing

ERP system ERP system

5 / 17

The centrally managed integration model achieves An effective integration service should allow you further data integration through a common to add your own data to standard master domain understanding of the exchanged objects, along with models. It should also work with your existing key mapping. Key mapping links the storage of solution landscape, enabling you to leverage identical physical objects under different identifiers current IT investments while exchanging data in different systems. among applications.

An integration service provides a lingua franca for applications to speak to one another across heterogeneous multi-cloud and hybrid environments.

INTEGRATION VERSUS DATA GOVERNANCE

The focus of master data integration isn’t data consolidation or quality – that’s the role of master data governance. Instead, integration provides a distribution layer that gives your line-of-business applications a consistent view of data. Ultimately, a data integration service should increase the effectiveness and reduce the cost and effort of data sharing.

6 / 17

Your data integration service should increase the effectiveness andreduce the cost and effort of data sharing.

SAP® MASTER DATA INTEGRATION

Chief data officers recognize that it’s not viable to merge all data domains across business units and functions to achieve a single enterprise data model. Different data domains have different data needs and require different standards and semantics.

The solution is the SAP® Master Data Integration service. The service enables you to unite separate data models with a shared identity and interoperability.

SAP Master Data Integration enables harmonized integration and distribution of master data objects and data among SAP and third-party applications. In practical terms, it applies standardized fields and attributes, such as name, type, and length, across data models that it then integrates.

The service delivers ready integration achieved in a single, harmonized way across a wide variety of SAP solutions – for example, SAP S/4HANA®, SAP Customer Experience solutions, and Ariba® Network. It also helps enable integration with third-party and legacy software.

The service is an important part of the Intelligent Enterprise, enabling smooth integration of information and insights across your applications, lines of business, and key business processes.

7 / 17

A New Paradigm: Federated Data Governance

Your organization needs master data integration Federated data governance enables you to manage to provide the same master data in the same state data where it’s best understood. It intelligently to all applications that need it. But integration alone separates your core, enterprise-wide master won’t optimize data quality. To truly conquer MDM, data from your application-specific master data. you also need master data governance. You need It applies the appropriate level of governance based to deduplicate existing data, avoid the creation of on the scope, ownership, and context of the data. new duplicates, and make sure new or changed And it empowers you to take a comprehensive, data is consistent right from the start. That way, scalable approach to orchestrating data gover- the master data you deliver to your LoBs will be nance across your entire IT landscape. of the highest quality. The federated model is an effective way to bridge This is the power of federated data governance – on-premise, multi-cloud, and hybrid cloud a whole new way of thinking about MDM. The landscapes. By supporting end-to-end business federated data governance imperative is driven by: processes and bidirectional communication, it • The need to flexibly apply the right level of data enables you to fuel cross-functional analytics, governance to reduce MDM cost and effort insights, and innovation. • The shift in the IT center of gravity to the cloud • The escalation of MDM as crucial to responding to a challenging business environment • The growing demand to drive new innovations, experiences, and business models

Federated data governance is a whole new way of thinking about MDM.

8 / 17

With federated data governance, you manage your each business unit must maintain its own data core master data separately from application data. standards to meet its own requirements – while You maintain the core master data in a central, still contributing to and consuming core data. independent cloud application. You maintain the application data in the LoB-specific data hubs, The same concept is useful across LoBs. For with unique data models, data-quality rules, and example, your procurement function might create approval workflows. You also classify which appli- new suppliers in a solution such as Ariba® Network, cations need to own and interpret a given data set. with local processes such as supplier self-service for registration in the online marketplace. Once You then federate your MDM processes across the LoB application captures the data, application- your LoBs and applications. That way, the people specific processes for data governance kick in. who use the data maintain and govern it where they use it – eliminating unnecessary central approval Centralized master data orchestration detects and keeping the management of the data in its which application owns which portion of the data. specific business context. It then sends the data to the respective owners for quality assurance. For example, it sends core Federated data governance is especially necessary master data to the central hub for approval and for businesses that operate in disparate industries. enrichment to meet corporate standards. It sends A good example is an energy company with application-specific data to the appropriate owner one business unit for upstream oil production, for context-specific enrichment and to make sure another for retail gasoline sales, and another for the data quality meets the application’s needs. alternative-energy development. While the parent Once the data is approved by its owners, the company must manage core data standards and integration layer ensures distribution to all requirements that extend across the enterprise, other applications.

The federated model is an effective way to bridge on-premise, multi-cloud, and hybrid cloud landscapes.

9 / 17

In fact, federation is valuable to any business your application landscape. And it must include that wants to optimize processes, insights, and out-of-the-box integration to keep data in sync. actions across business units, functions, and geographies. It combines a common understanding Let’s say you create a new supplier centrally of enterprise-wide master data with the manage- with core attributes. That would trigger a ment of LoB- or process-specific data attributes standardization and enrichment process for that require a high degree of quality. application-specific attributes. Alternatively, you can create the supplier in the application With the right MDM platform, you can achieve component. It would then flow into the centrally federated data governance by taking advantage installed MDM solution to validate and improve of existing systems. It should be straightforward the data. In either case, you can federate the clean, to establish MDM processes that maintain a single core master data out to other LoB applications. understanding of master data and orchestrate that understanding across multiple locations in In this way, federated data governance gives you: your IT landscape. And implementation should be • An adaptive governance model to optimize cost-efficient. MDM scope, benefits, and effort • High-quality core master data, with no duplicates An effective solution provides support for inte- • Less need for up-front harmonization across gration that you can consume in the public cloud business units to support multi-cloud and hybrid application • End-to-end data visibility landscapes. It should include prebuilt but flexible • The ability to govern data where it’s best processes that orchestrate data governance across understood

Federation is valuable to any business that wants to optimize processes, insights, and actions across business units, functions, and geographies.

10 / 17

The Case for Cloud-Centered Federation

Why enable federated data governance in a public applications. And continual updates give you cloud? There are numerous advantages. immediate access to the latest application innovations. First, the center of gravity is shifting cloudward for databases, applications, and infrastructures. In addition, the advanced security capabilities of What’s more, as companies rely on more IoT inputs, trusted cloud providers protect valuable corporate that data will be captured in the cloud. MDM is information and customer privacy. And the scaling- the glue that will bind IoT scenarios to business up-and-down agility of the cloud lets you respond processes. instantly to changing workloads.

Second, the cloud lets you take a stepwise approach Market trends show a shift to the cloud – SaaS, to enterprise MDM. You can start small with a PaaS, or infrastructure as a service (IaaS) – for single data domain and then expand to additional MDM solutions. This is no surprise, as accelerating domains, capabilities, and use cases. You can migrations of data and applications to the cloud likewise begin with software as a service (SaaS) are pulling other data management disciplines and then move to platform as a service (PaaS) – along with them. These trends will surely continue which many organizations prefer. as more organizations recognize the value of cloud-centered MDM. Third, all the well-established arguments in favor of the cloud apply equally to MDM. Operating Of course, an effective federation platform should expenses for the cloud spread budget predictably enable data governance even if your MDM is over the long term, avoiding up-front capital currently located on premise. It should then expenses for on-premise infrastructure. support a smooth cloud migration, whether Subscription pricing for software is generally you’re simply extending MDM into the cloud or more affordable than licensing fees for installed embracing the cloud for all MDM activities.

The center of gravity is shifting cloudward for databases, applications, and infrastructures.

11 / 17

Master Data Governance in the Cloud

SAP has a clear vision for federated data governance and more flexible, adaptive MDM – and the technology to achieve it (see Figure 3).

Figure 3: Data Federation Enabled by SAP Master Data Governance, cloud edition

SAP® Business Technology Platform

SAP Master Data Governance, cloud edition

Any trigger system Core master data

1 2

Master data integration

Process Data federation integration

SAP S/4HANA® SAP Customer Experience SAP Ariba® solutions

3 3 3

Application Application Application master data master data master data

Core Core Core master data master data master data

Managed by SAP Master Data Governance on SAP S/4HANA

12 / 17

The SAP® Master Data Governance application integration application offers the core functionality provides ready-to-run, domain-specific data of our on-premise solution, plus specific capabilities governance that empowers you to manage and that take advantage of the cloud. distribute data across your enterprise. Tight integration with other SAP solutions enables the SAP Master Data Governance gives you the reuse of data models, business logic, and validation flexibility to take a centralized or decentralized frameworks. Open integration with third-party approach to MDM. In a centralized model, you can software supports your entire technology stack. create your master data in a single, centralized location. That way, you start with high-quality During the past decade, a large number of market- data and then distribute it to applications and leading organizations around the world have come users. Your LoBs can add local attributes – to rely on SAP Master Data Governance. Now, SAP for example, supplier payment terms for a has introduced SAP Master Data Governance, specific context. cloud edition. The cloud edition of our MDM and

SAP Master Data Governance gives you the flexibility to take acentralized or decentralized approach to MDM.

13 / 17

With a decentralized approach, you can allow new acquisitions, enter new markets, and launch master data to be created at multiple locations new business models. Your master data and its across your landscape. Federation centrally quality must evolve accordingly. With SAP Master prevents creation of duplicates and enables all Data Governance, you can be sure your data the relevant data owners to be involved so that models and processes will continue to meet master data is at the right quality level before your needs. it’s distributed for consumption. Your LoBs get application-specific data for their processes, SAP Master Data Governance gives you a clear and your enterprise gets the core data it needs path to federated data governance. If you’re for enterprise-wide operations and analytics. already using the on-premise edition, you can move all or part of your MDM workload to the SAP Master Data Governance optimizes MDM cloud on your own timeline while complementing across all your domains. In fact, it comes with and extending the solution with cloud capabilities. domains built in. You can expand on these or add You retain the functionality you’re familiar with your own to meet unique needs. It also comes with while gaining the speed, scalability, and cost- prebuilt capabilities, informed by our decades effectiveness of the cloud. of experience working with applications and processes that rely on master data. That sets If your organization is just embarking on MDM or you up for faster and greater ROI. refining early MDM efforts, you can begin with data integration in the cloud. Once you’ve mastered Just as important, SAP Master Data Governance cloud-centered integration, you can continue enables you to perform continual monitoring and toward data governance and data quality manage- improvement of master data quality. Over time, ment in the cloud. You’re then positioned to embark your organization will adopt new processes, make on federated data governance.

SAP Master Data Governance gives you a clear path to federated data governance.

14 / 17

Becoming an Intelligent Enterprise

For federated data governance to be effective, you Emerging capabilities such as the IoT, artificial need intelligence built in. Intelligent capabilities intelligence (AI), machine learning (ML), robotic must be directly embedded into core solutions so process automation (RPA), and blockchain promise that you don’t need to create separate data lakes. to transform efficiencies, insights, and experiences. You likewise need a common data foundation and semantic layer so that business processes can talk You need a data platform advanced enough to to one another and data can be consumed across integrate intelligent technologies with your your heterogeneous IT landscape. analytics and decision models (see Figure 4).

At the same time, intelligent technologies are proliferating throughout your organization.

Figure 4: MDM Supported by Intelligent Technologies

oud Master data across coud and onpremise appications data m ation anage pic me p nt

usiness netors

rocurement upp chain it manag Artiﬁcial intelligence and machine ua em e ta n earning to poer autonomous a t D semanaging master data management Enterprise

master data o o i

n n management t t s a e o e s r r c p ustomers i c i d roduct iecce t r a a i t tr s ion n nsights rom the oT ig Data and e e a n a enterprise master data u s s i s n e e n s i s s a u p Finance Manuacturing p se i ri ca p ti er on nt Moie s The oT

ig Data

15 / 17

You also need underlying high-quality data to Intelligent enterprises automate complex business allow for highly automated process execution. processes around a united core of master data in That way, you can make sure your investment in the cloud. They then apply advanced technologies intelligent technologies is helping to get the right to turn insight into action across the business insights to the right people in the right context in real time. As a result, they can automate and at the right time. processes, quickly innovate new products and services, create new business models, and deliver Ultimately, federated data governance can help exceptional experiences. your organization become an intelligent enterprise.

For federated data governance to be effective, you needintelligence built in.

16 / 17

First Steps to Federated Data Governance

Achieving federated data governance can be a • Track your shift to the cloud. Which workflows journey – though it doesn’t have to be a long will shift to the cloud, and which will remain on one. But your first steps should begin now. premise? How many new applications will be cloud native? If your IT strategy is cloud focused, • Take a data management health check. your MDM should be too. Evaluate honestly the effectiveness of your existing data management programs and • Identify your technology enablers. Achieving governance organization. Can you trust your federated data governance requires the right core master data? Do LoBs have the quality foundational technology. You need a platform information they need? Identify practices you that enables data integration across a hetero- can build on – and the net-new approaches geneous IT landscape. And you want a solution you require to be more agile. that combines cloud-centered core MDM with application-specific data management where • Assess emerging use cases. Which business your lines of business need it. scenarios are being digitalized? How will data analytics change? How will intelligent Finally, federated data governance calls for the right technologies like the IoT, AI, ML, RPA, blockchain, technology partner. Look for a trusted advisor and other forms of automation transform your with a clear vision for MDM and adaptive data data needs? You want your data management governance – and a detailed road map for trans- to be future proof. forming the management of your most valuable data assets.

READY TO CONQUER MDM? To learn more, visit the master data governance SAP Community and our informative Web pages on enterprise master data governance to explore products, services, reports, videos, and expert insights.

17 / 17

www.sap.com/contactsap

Studio SAP | 73818enUS (21/01)

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affi liate company.

The information contained herein may be changed without prior notice. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifi cations may vary.

These materials are provided by SAP SE or an SAP affi liate company for informational purposes only, without representation or warranty of any kind, and SAP or its affi liated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP or SAP affi liate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

In particular, SAP SE or its affi liated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE’s or its affi liated companies’ strategy and possible future developments, products, and/or platforms, directions, and functionality are all subject to change and may be changed by SAP SE or its affi liated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to diff er materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, and they should not be relied upon in making purchasing decisions.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affi liate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies.

See www.sap.com/trademark for additional trademark information and notices.